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Rural Confidence Steadies

Rural Confidence Steadies

New Zealand farmers face a new season’s production in better heart than two months ago but are still watching spending carefully according to latest survey data.

The bi-monthly AC Nielsen/Rabobank Rural Confidence Survey, taken in April/May, shows that international stability has lifted farm confidence from the lows reached in the last survey. Most farmers now predict a stable 12 months ahead, although half still expect to earn less income and one in five plans to spend less on their business.

Rabobank managing director Bryan Inch said the survey showed farmers are realistic about the rural economy and while not anticipating significant gains there is an expectation of stability.

After an indifferent season for most farming sectors many farmers are expecting a period of relative stability.

Overall the outlook for farming has stabilised - 47 per cent of all farmers now predict their industry will remain steady this coming year, up from 30 per cent last survey. And far fewer expect things to get worse (45 per cent versus 66 per cent).

“The mild start to the winter and the relative stability of the New Zealand dollar, albeit at high levels, are both reducing uncertainty for the coming season,” he said.

Beef farmer pessimism in particular appears to have bottomed out, now with only 50 per cent of beef producers predicting worsening industry performance, down from 80 per cent in the last survey.

“There is a feeling that recent trends in the exchange rate and beef schedule may have stabilised with an expectation from most beef farmers of consolidation and certainty.”

Across farm types, the attitude towards farm investment has also improved, with over three quarters of farmers saying they will maintain or increase current spending on land, stock or plant.

This is a very positive sign for maintaining and improving the current production levels from agriculture.

Half the country’s farmers are braced for lower incomes this coming 12 months, but that’s an improvement on the last survey (67 per cent) and the number who are expecting no change has increased to 33 per cent.

“Farmers will be very cautious with spending in the coming season due to reduced income expectations and most farmers expecting farm input costs to rise.”

Most farmers (82 per cent) believe interest rates will either stay the same or drop; only 17 per cent believe rate rises lie ahead. The AC Nielsen/Rabobank Rural Confidence Survey is the first survey of its type in New Zealand, and uses AC Nielsen’s 1000-strong panel of farmers across the country. The next results will be released in August 2003.

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